Artificial Intelligence in corporate governance: a few inquiries on the (non-)compliance of directors’ duties from a Portuguese law perspective

Abstract

It is widely accepted that directors’ duties encompass the duty to prepare and analyse information concerning the company’s business and affairs and market conditions and the duty to monitor and oversee the company’s actual and prospective economic and financial outlook. While exercising the so-called business judgment rule, directors shall question themselves as to whether the information reasonably available at the time a decision is to be made provides sufficient grounds to support it. They also must have in due regard the underlying business rationality of the decision concerned. The issue merits particular attention in the context of companies undergoing economic or financial distress in the vicinity of insolvency. Directors usually resort to assistance from internal staff and external advisors as well as to technological tools for performing managerial activities. There are a number of options of technologies that employ artificial intelligence (AI) and that have shown a high degree of certainty in predicting scenarios of economic or financial distress. However, directors are not exempted from potential accountability for actions taken in breach of their duties by simply employing AI technology. If, how, and to which extent the use of AI in corporate governance will affect the compliance of a director’s duties are questions yet to be addressed.